The ACA: key to ending ‘job lock’ for entrepreneurs

Increased access to health care will make it easier for potential entrepreneurs to go out on their own

By Seth A. Goodall

Published: August 9, 2013

There are currently 23 million self-employed entrepreneurs in the United States, and that number continues to rise. In New Hampshire alone, more than 119,000 self-employed firms are contributing to our economy’s growth and success. These innovative entrepreneurs reflect a diverse array of professions and businesses that are helping to drive our economy -- from consultants and IT specialists to painters and roofers.

As the number of self-employed individuals continues to grow, one key concern for entrepreneurs looking to go into business for themselves has historically remained unaddressed: health care. But the Affordable Care Act is offering exciting new options for health coverage for the self-employed.

We know that increased access to quality, affordable health care will make it easier for potential entrepreneurs to go out on their own instead of staying at larger firms simply because of "job lock” or the lack of access to affordable insurance outside of work. In fact, one recent study by the Urban Institute estimated that by making health insurance more affordable and ending discrimination against pre-existing conditions, the law will enable an additional 1.5 million Americans to go into business for themselves.

Under the Affordable Care Act, self-employed business owners now have more options than ever to find affordable health coverage, and it’s important to know the facts about the choices available as you start, or continue to operate, your own business.

First, beginning in January 2014, self-employed individuals and other consumers will be able to purchase their insurance through new health insurance marketplaces, or exchanges.

All qualified health insurance plans offered in these new marketplaces will cover a core package of “essential health benefits,” ranging from preventive and wellness services to maternity care and mental health services. The plans will vary according to the percentage of costs the health plan covers.

Additionally, issuers may offer catastrophic-only coverage, which includes free prevention and several primary care visits, primarily to young adults under 30 years of age.

Enrollment begins on Oct. 1, and the marketplaces open in January 2014.

Self-employed individuals may also qualify to get lower costs on monthly premiums when they purchase private health coverage in the marketplace.

When you fill out a marketplace application, you will learn if you qualify for these lower costs. Depending on income, consumers and the self-employed may also qualify for lower out-of-pocket costs, so they won't have to pay as much for deductibles, copayments and coinsurance.

(For more information on individual tax credits and cost-sharing reductions offered through the marketplaces, visit healthcare.gov/what-if-im-self-employed.)

It’s also important to know that, beginning in 2014, the Individual Shared Responsibility provisions of the Affordable Care Act call for each individual to have: basic health insurance coverage (known as minimum essential coverage) for each month; qualify for an exemption; or make an Individual Shared Responsibility payment when filing a federal income tax return starting in 2015.

However, if coverage is unaffordable, if you spend less than three consecutive months without coverage, or if you qualify for an exemption for other reasons (including hardship and religious beliefs), you will not be required to make a payment. (For more information on these and other provisions impacting the self-employed, visit sba.gov/healthcare.)

For many self-employed entrepreneurs, health coverage is a key factor in deciding whether to venture out on their own and transform an idea into a business. For the first time ever, the Affordable Care Act is giving America’s innovators a way out of “job lock” by providing access to quality, affordable health insurance to help offer peace of mind to entrepreneurs while they turn their minds to helping the economy grow and thrive.

And in a country built on the spirit of entrepreneurship, this is good news for us all.

Seth Goodall is the U.S. Small Business Administration’s New England regional administrator.

This article appears in the August 9 2013 issue of New Hampshire Business Review